\chapter{Case Study: \\
Survivable Capacity Expansion in Iraninan Oil Products
Distribution Network} In this chapter we study the minimum cost capacity
expansion problem for the nation wide oil products distribution network in Iran.
Due to the critical role of oil products in the economy of the country as well
as the every day life of people,  this network should be survivable. We start by
providing a background on the network and its functionality and will then
discuss data entities of the problem.
\label{chap-five}
\section{Background}
National Iranian Oil Products Distribution Company (NIOPDC) was established in
1928.The company has been responsible for supply and distribution of oil products in
Iran (nation-wide) for over 80 years. The company is scattered over 37 districts
 (mainly capitals of provinces), 232 regions (in city centers), 86 oil products'
 depots. Total instant strorage capacity amounts to over 11.5 billion litres.
 NIOPDC is responsible NIOPDC is responsible for daily distribution of over 220
 million liters of oil products, all around the country. A major portion of the
 products is produced and refined within the country, in Iraninan refineries and
 the rest is imported, mostly through Persian Gulf.
 \section{Distribution Model - Over View}
 To get a big picture of oil products supply chain please see the image in
 \fref{fig:hist5}.
 Crude oil is extracted and transported to oil refineries to be processed.The
 refined product is then pumped through a pipeline network to the terminal
 storages, and then is distributed and stored locally to be delivered to the retailers and consumers for sale. The part of the distribution network that is under study here is where the refined
 products is being delivered from the refineries to the local
 warehouses.\\ Crude oil is transported to the refineries via a network of crude
 oil pipelines. After refining, the oil products are stored in large oil products
 depots and then transported to the local oil depots and warehouse either with products
 pipelines or rail road tanks. The products are then trasnported from the local
 warehouses to the consumers with road trucks. Import and export ports at
 the Persian Gulf or the Caspian sea use oil vessels.
 
 
 \begin{figure}

\centering

\includegraphics[width=1\textwidth]{Chapter-5/figs/supplychain}

\caption{Oil Supply Chain}

\label{fig:hist5}

\end{figure}
 
 \subsection{Products}
 Various products and intermediate products are produced in the oil refining
 process in refineries.These products include the following:
 \begin{enumerate}
   \item Liquid Petroleum Gas (LPG)
   \item Gasoline
   \item Naptha
   \item Kerosene and jet aircraft fuel
   \item Diesel fuel
   \item Fuel oils
   \item Paraffin wax
   \end {enumerate}
   
   Among the products mentioned above, Gasoline, Kerosene, Diesel fuel and Fuel
   oil are considered as major products for NIOPDC. These products are
   distrbuted based on a nation-wide distribution plan and are the ones
   under study for the purpose of this research.
   
   \subsection{Refineries as supply nodes}
   There are nine existing refineries in Iran, receiving approximately 1.75
   million barrels per day (in 2011) of crude oil and turning them into oil
   products.
   The list of the refineries are as follows. 
   \begin{enumerate}
   \item Abadan
   \item Isfahan
   \item Bandar Abbas
   \item Tehran
   \item Arak
   \item Tabriz
   \item Kermanshah
   \item Shiraz
   \item Lavan Island 
     \end {enumerate}
     
\begin{figure}

\centering

\includegraphics[width=1\textwidth]{Chapter-5/figs/IranRefineries}

\caption{Iranian Oil Refineries}

\label{fig:hist6}

\end{figure}

\begin{table}

\caption{Production Statistics by Product and Refinery in 2011-2012 ( million
liters per day)}

\label{tab:eight}

\begin{center}

\begin{tabular}{lcccc}

\toprule

Refinery  & Gasoline  & Kerosene & Diesel Fuel & Fuel Oil\\

\midrule

Abadan &10.8 & 2.9 & 20.4&20.0 \\
Bandar Abbas & 8.9& 2.2& 14.9& 17.3 \\ 
Isfahan & 8.1& 2.5 & 21.7 & 13.0 \\
Tehran & 6.8 & 2.9 & 12.8 & 8.2 \\
Arak & 6.2 & 1.8 & 12.2 & 10.1 \\
Tabriz & 2.6 & 1.7 & 6.2 & 3.9 \\
Shiraz & 2.0 & 0.2 & 3.2 & 1.7 \\
Lavan Island & 1.1 & 0 & 2.3 & 1.6 \\
Kermanshah & 0.8 & 0.8 & 1 & 1.1 \\
Total & 47.3 & 14.9 & 94.7 & 77 \\

\midrule

\bottomrule

\end{tabular}

\end{center}

\end{table}
 
     
     The localtion of the refineries are depicted in \fref{fig:hist6}.
   For the data regarding the supply of oil products
   from each one of the refineries please see \tref{tab:eight}.
   
   
  \subsection{Means of Transportation}
 
 
 Common means of transportation of oil products are:
 \begin{enumerate}
   \item Pipelines
   \item Railroad tanks
   \item Road trucks
   \item Waterborne shipments ( Vessels)
 \end{enumerate} 
 Oil pipelines typpically range from 4 to 48 inches in diameter and are the
 most economical mean for transporting oil products, especially for large quantities of products over long distances.They have a huge initial installation cost, but once installed, they transportaion cost is much lower than the other means.
The cost of using road trucks increase sharply with distance, making it the most
expensive mode of oil products transportation. Also where transporting high
volume of products is needed, becasue of their low capacity they are
impractical. So, commonly the use of road trucks is limited to lower volume of
products, mostly sold to consumers and retailers, over short distances.

While railroad tanks cost do not rise as sharply with distance traveled, their
costs, too, remain a multiple of pipeline and waterborne alternatives.
[Reference].  The use of vessels, although their cost is competitive with
pipelines, is limited by geography to import and export purposes at the Persian
Gulf, or the Caspian Sea ports.

Although there are scheduling
 and operationsl challenges in using pipelines (the need of pumping
 stations, product flow sequencing and the speed of 3-8 miles per hour), they are the most
 economical mean for transporting oil products, especially for large quantities of products over long distances. For example, In the U.S. oil pipeline shipments account for more than 17\% of the freight moved nationally, but less
than 2\% of the national freight cost.The United States has the largest
network of oil pipelines of any nation. All of Europe, for instance, has a
pipeline network that is only 1/10 the size of the U.S. network. [Reference]

Since the part of the distribution network that is under staudy here is where
the products are being delivered to large products depots, from the refineries,
the only means of transportation considered in the model are pipelines and
railroad tanks.
 
 \section {Other Products Transportation Activities}
 In addtion to blah blah blah , NIOPDC is also responsible for bunkering and
 swapping of oil products.
 
 \subsection{Bunkering}
  
 The Strait of Hormuz is a strait between the Gulf of Oman and the Persian Gulf.
It is the only sea passage from the Parsian Gulf to the open ocean and is one
of the world's most strategically important choke points. 
Each year thousands of vessels and oil tankers pass
through the Persian Gulf and the Starit of Hormoz.About 20\% of the world's
 petroleum, and about 35\% of the petroleum traded by sea,
passes through that strait making it a highly important strategic location for
international trade.[NN] Due to the closeness of Iranian ports and also the long
water border of the country along side of the Persian Gulf, Iran has the chance
of providing fuel and other services to the vessels commuting in Persian Gulf and through the
staright of Hormuz.Bunkering is the process of supplying ships with fuel, for
their own use. The product sold during this process is called bunker fuel which
is technically any type of fuel oil used aboard ships. The product sold in
Persian Gulf by NIOPDC goes under the category of Fuel oils. For the data
regarding the sales of this product please see table XXXX.

Please see image XXX ( from wikipedia) for bunkering.
     
  \subsection{Swap}
  
  Oil swap process in Iran involves importing crude oil and/or oil products
  mostly from the Capsin sea ports (from Russia, Azerbaijan, Turkmenistan and
  other countries in the region ) and delivering an equivalent amount to the
  potential buyers in the Persian Gulf. Iran imports crude oil and oil products
  from those countries to either be refined at Tehran, Tabriz and Arak oil
  refineries, or to be used in the northern and central parts of the country
  and then delivers an equivalent amount of oil to potential buyers in the
  Persian Gulf. This operation would allow the country to:
  \begin{enumerate}
    \item Providing fuel for the power plants and house hold consumptions in the
    northern parts of the country more easily and with lower cost
    \item Saving oil products transportation mean, mostly road trucks, and
    making them available to other parts of the country.
    \item Exporting the old products that have been in oil warehouses for
    longer and keeping the newer imported ones, making the storage time of
    products shorter.
    \item Generating revenue ( tariff for swapping and transportaing costs)
  \end{enumerate}
  
  The swap products that are relevant to this model are gasoline and fuel oil.
  Iran also swaps LPG (Liquid Petroleum Gas) and crude oil, which are not considered in this
model, as they use a separate distribution network.

 For the data
regarding the sales of this product please see table XXXX.

Please see image XXX ( from wikipedia) for sawp.

 
 \section {Modeling the problem}
 The mentioned distribution network is working and functional at its current
 state. However due to the changes in the\ldots.. XXX
 
 
 \subsection{Nodes and Links}
 
 Supply nodes-There are $9$ refineries across the nation, which are:
 
 Please see the image in XXX to see the geographical distribution of the
 refineries.
 
 Demand nodes- There are 90 major oil products warehouses (including the ones
 supporting airports) in the country. These warehouses get their products from
 refineries, either directly, or indirectly( from other warehouses) via
 piplelines or rail road tanks. These warehouses then supply products to the
 consumers via road trucks.Please see image XXX for geographical distribution on
 the demand points in the country.
 
 
 \subsection{Supply and Demand}
 
 
 
\subsection{Failure Scenarios}
 
 
 
 \subsection{Data Entities}
 
 \subsection{Supply Data : Production and Import }
 
 \subsection{Bunkering and Swap Data}
 

 

 
 \subsection{Demand Data : Consumption Data by Product}
 
 
 \subsection{Alternatives: Costs and Capacities}
 
 
 
 
 
 
 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 